Governor optimistic about refinery plans

November 25, 2012

PITTSBURGH (AP) - Gov. Tom Corbett says that he met with leaders of oil and gas giant Royal Dutch Shell and that their preliminary plans to build a multibillion-dollar petrochemical refinery in western Pennsylvania are on track, a newspaper reported Friday.

Corbett said earlier this week that he thinks the project is going in the right direction and that last week's meeting to discuss future steps for the project "went very, very well."

He described the meeting's participants from Shell as "people higher in the organization than we've ever seen before," the Pittsburgh Post-Gazette reported. Still, crucial decisions remain in the development process, and Shell has not made a final decision to build at a site in Beaver County that is its first choice in a region booming with natural gas production.

"That's always been my concern," Corbett said. "Until we put a shovel in the ground, I'm always worried about it."

The company has an end-of-year deadline on a deal for land near Monaca on the banks of the Ohio River, about 35 miles northwest of Pittsburgh. Shell spokeswoman Kayla Macke told the newspaper only that the company continues to evaluate the site.

The so-called cracker plant would convert natural gas liquids from the state's newly accessible reserves into more profitable chemicals such as ethylene, which is used to make plastics, tires, antifreeze and other products.

Actual construction could be years away. The site is home to a Horsehead Corp. zinc smelter, which the company expects to shut down.

In March, Shell announced that it had signed a land option agreement with Horsehead to evaluate the site after Pennsylvania had competed with Ohio and West Virginia for the tentative commitment. In addition to making it eligible for at least 15 years of property tax exemptions, Corbett and state lawmakers ensured the Shell plant would be eligible for a 25-year state tax credit of a nickel per gallon of ethane used beginning in 2017.

The tax incentives could easily surpass $1 billion in value.

Beaver County Commissioner Joe Spanik told the Post-Gazette that county and municipal officials are waiting to hear which portions of the 1,000-acre industrial site Shell will use. He said identifying the approximately 350 acres for development is necessary to start an application for tax exemptions there.

Shell agreed in October to make payments in lieu of taxes to Potter Township and Central Valley School District valued at 110 percent of the amount currently generated in property tax revenues, the newspaper reported.